Restoration Management Company, LLC
35 Sutton Place Suite 9G
New York, NY 10022

November 11, 1999

Gentlemen:

Pursuant to Section 5(ii) of the Agreement between Restoration Management
Company, LLC ("Restoration") and Sentry Technology Corporation (the "Company")
dated October 15, 1999 (the "Agreement"), this letter confirms the parties'
understanding as to the compensation to be paid to Restoration for the services
of Anthony A. Gerbino ("Gerbino") to the Company.

0  As of November 1, 1999, Restoration shall be compensated for the
   services of Gerbino to the Company at the rate of $50 per hour for the
   first 200 hours billed each month but shall not receive compensation
   for hours billed in excess of 200 hours per month.

0  The Company shall pay Restoration on the 15th day of each month
   beginning November 15, 1999 for hours billed during the previous
   month.

0  The Company shall pay directly or reimburse Restoration, upon receipt
   of periodic billings, for all reasonable out-of-pocket and incidental
   expenses such as travel, lodging, entertainment, postage, telephone
   and facsimile charges incurred by Gerbino in connection with his
   services to the Company.

As contemplated by the Agreement, Restoration shall receive no additional
compensation for services rendered by Gerbino prior to November 1, 1999.

                                                Very truly yours,
                                                Sentry Technology Corporation

                                           By:  /s/Peter J. Mundy
                                                Peter J. Mundy
                                                Vice President-Finance and CFO

Accepted and agreed as of November 11, 1999

Restoration Management Company, LLC

By: /s/Anthony H.N. Schnelling
         Anthony H.N. Schnelling
         Managing Director

<PAGE>


                                    AMENDMENT

          Whereas, Restoration Management Company, LLC ("Restoration") entered
into an agreement with Sentry Technology Corporation (the "Company") as of
October 15, 1999 pursuant to which Restoration agreed to provide certain
operational and financial consulting services to the Company (the "Agreement");
and

          WHEREAS, certain options issuable to Restoration at the time that the
Agreement was entered into were referred to in the Agreement as "incentive stock
options"; and

          WHEREAS, the Company and Restoration wish to amend the Agreement in
accordance with the terms hereof;

          NOW, THEREFORE, the undersigned hereby amend the Agreement as follows:

          1. The words "incentive stock options" in the first sentence of
Section 5(v) of the Agreement are hereby deleted and in their place is
substituted the words "non-qualified stock options".

          2. The word "Restoration" in the first sentence of Section 5(v) of the
Agreement is hereby deleted and in its place is substituted the word "Anthony
H.N. Schnelling".

          3. The following sentence shall be inserted immediately following the
first sentence of Section 5(v) of the Agreement:

                  Such options may be assigned or transferred only to an
                  employee or consultant of the Company or such employee or
                  consultant's family members as defined in Section A(1)(a)(5)
                  of the General Instructions to Form S-8 of the Securities
                  Act of 1933.

          4. Section 5 of the Agreement shall be amended to add a subsection
(viii) which shall state as follows:

                  The Company shall prepare and file with the Securities and
                  Exchange Commission, within 20 days following the filing of
                  its annual report on Form 10K for the year ended December
                  31, 1999, a registration statement on Form S-8 including a
                  reoffer prospectus with respect to the shares of common
                  stock issuable upon exercise of the options issued pursuant
                  to the Agreement and shall use its best efforts to cause
                  such registration statement to become effective and remain
                  effective during the term of such options plus, if such
                  options are exercised in whole or in part, for one year
                  after such exercise.


<PAGE>


          IN WITNESS WHEREOF, the undersigned have signed this Amendment as of
the 9th day of November, 1999.

                                     SENTRY TECHNOLOGY CORPORATION


                                     By: /S/ WILLIAM A. PERLMUTH
                                        ----------------------------
                                             William A. Perlmuth
                                             Chairman of the Board

                                     RESTORATION MANAGEMENT
                                     COMPANY, LLC

                                     By: /S/ ANTHONY H. N. SCHNELLING
                                         -------------------------------
                                             Anthony H.N. Schnelling
                                             Managing Director

<PAGE>


                       RESTORATION MANAGEMENT COMPANY, LLC
                            35 Sutton Place Suite 9G
                               New York, NY 10022

October 15, 1999

William A. Perlmuth, Esq.
Chairman of the Board
Sentry Technology Corporation
350 Wireless Boulevard
Hauppauge, New York 11788

Dear Mr. Perlmuth:

This will confirm the understanding and agreement (the "Agreement") between
Sentry Technology Corporation (the "Company") and Restoration Management
Company, LLC ("Restoration") regarding the objectives, tasks, work product, fees
and expenses for the engagement of Restoration to provide operational and
financial consulting services to the Company.

          1.        ENGAGEMENT. To serve as the Chief Executive Officer of the
                    Company, reporting to the Board of Directors and to direct
                    the Company in its restructuring efforts (the "Engagement").

          2.        TASKS.

                    0         Perform the functions and duties of Chief
                              Executive Officer and such other senior executive
                              positions at the Company as may be appropriate and
                              agreed to by the Board of Directors.

                    0         Manage the Company's daily operations and
                              restructuring efforts, including negotiating with
                              parties in interest.

                    0         Assist in such other matters as may be mutually
                              agreed upon.

          3.        WORK PRODUCT. Our work product will consist of:

                    0         Information to be discussed with you and others,
                              as you may direct.

                    0         Written reports and analysis worksheets to support
                              our actions as we deem necessary or as you may
                              request.

          4.        STAFFING. Anthony H.H. Schnelling will be the principal
                    responsible for the overall engagement and will serve as
                    Chief Executive Officer of the Company. He will be assisted
                    by Anthony A. Gerbino, who may also, with the agreement of
                    the Board of Directors, be appointed to an executive
                    position with the Company. In addition, we have
                    relationships with, and periodically retain, independent
                    contractors with specialized skills and abilities to assist
                    us. If retained, any such independent contractors are
                    considered to be Restoration staff for the purposes of the
                    Engagement.

          5.        COMPENSATION. As compensation for the services rendered by
                    Restoration hereunder, the Company shall pay Restoration as
                    follows:

                    (i)       A retainer of $40,000 (the "Initial Amount"),
                              payable upon the signing of this Agreement (the
                              "Retainer"). This retainer shall remain
                              outstanding during the term of the Engagement,
                              provided, however, that $20,000 of the retainer
                              shall be applied to pay fees due Restoration on
                              January 15, 2000 for the month then beginning
                              2000. In the event that the Company terminates the
                              Engagement prior to the last day of the third
                              month following the commencement of the
                              Engagement, Restoration shall be entitled to
                              retain the remaining Retainer in full.

                    (ii)      Restoration shall receive $20,000 per month in
                              fees as compensation for time devoted to the
                              Engagement by Anthony Schnelling. Time devoted to
                              the Engagement by Anthony Gerbino to assist
                              Anthony Schnelling during the two weeks following
                              the commencement of the Engagement shall be
                              provided by Restoration to the Company at no
                              additional charge. Thereafter, Restoration shall
                              be additionally compensated for all time devoted
                              to the Engagement by Anthony Gerbino, in excess of
                              occasional support time, at (i) an hourly rate to
                              be agreed with the Board of Directors, or (ii) in
                              the event Restoration recommends that Anthony
                              Gerbino assume an executive position with the
                              Company, a monthly fee commensurate with the
                              duties being performed, but in no event to be less
                              than the monthly salary currently being paid to
                              senior executives of the Company performing
                              similar tasks.

                    (iii)     A success fee equal to 1% of the value to be
                              received by the Company and/or its equity holders
                              as a result of any sale, merger, joint venture or
                              combination of the Company with any party
                              whatsoever, including, but not limited to any
                              transaction entered into with current or former
                              officers, directors or shareholders of the
                              Company; provided, however, that any such success
                              fee shall be capped at $100,000 and a success fee
                              equal to 1% of the value of any financing entered
                              into by the Company, whether for debt, equity or
                              any combination thereof; provided, however that
                              the size of any such financing exceeds $5 million,
                              provided further, that any such success fee shall
                              also be capped at $100,000.

                    (iv)      If the Company enters into any agreement or
                              arrangement with respect to the Engagement, with
                              anyone contacted during the Engagement, at any
                              time during a period from the date hereof through
                              the close of business on the last day of the 6th
                              month following the Termination, which agreement
                              or arrangement would have caused the Company to
                              owe Restoration a payment pursuant to subsection
                              (iii) of this paragraph 3 had such agreement or
                              arrangement been entered into prior to the
                              Termination, than the Company shall make such
                              payment as if the Termination had not occurred.

                    (v)       The Company shall, effective with the commencement
                              of the Engagement, issue to Restoration incentive
                              stock options to purchase 200,000 shares of the
                              common stock of the Company at an exercise price
                              of $0.188 per share. Such option will be
                              immediately exercisable and shall expire on the
                              second anniversary of the Termination; provided,
                              however, that such options may not be exercised
                              (A) following the Termination of the Engagement by
                              Restoration prior to the last day of the sixth
                              month following the commencement of the
                              Engagement, unless Restoration has terminated the
                              Engagement because the Company has acted in bad
                              faith, or has not remained current with its
                              payment obligations to Restoration, as set forth
                              herein, or has not or is unable to pay its trust
                              fund tax obligations (including but not limited to
                              withholding taxes, sales taxes), or (B) upon the
                              Termination of the Engagement by the Company for
                              cause. "Cause" as used in this sub-section shall
                              mean the willful or grossly negligent failure of
                              Restoration to perform its obligations hereunder
                              or of Schnelling to carry out the duties of Chief
                              Executive Officer.

                    (vi)      The Company shall pay directly or reimburse
                              Restoration, upon receipt of periodic billings,
                              for all reasonable out-of-pocket and incidental
                              expenses incurred in connection with the
                              Engagement such as travel, lodging, entertainment,
                              postage, telephone and facsimile charges.

                    (vii)     The fees described above shall be due and shall be
                              paid by wire transfer on the dates set forth in
                              the schedule on Exhibit 1 hereto. The expenses
                              described above shall be payable by the Company by
                              wire transfer immediately upon receipt by the
                              Company of Restoration's invoices, which shall be
                              presented monthly.

          6.        TIMING. We will commence this engagement immediately upon
                    receipt of a signed engagement letter and the Retainer.

          7.        INDEMNIFICATION. The Company hereby agrees to indemnify and
                    hold harmless Restoration and its officers, members,
                    principals, affiliates, subcontractors, their respective
                    directors, officers, agents and employees (collectively the
                    "Indemnified Persons") from and against any and all claims,
                    liabilities, losses, damages, and expenses incurred by any
                    Indemnified Person (including but not limited to any
                    Indemnified Person's counsel fees and disbursements and the
                    costs of such Indemnified Person's professional time (such
                    professional time will be reimbursed at our rates in effect
                    when such future time is required), as they are incurred,
                    arising in connection with investigating, preparing for, or
                    defending any action, formal or informal claim,
                    investigation, inquiry or other proceeding, whether or not
                    in connection with pending or threatened litigation) which
                    are related to or arise in any manner out of the engagement
                    contemplated hereby, including any legal proceeding in which
                    any Indemnified Person may be required or agree to
                    participate in, but in which such Indemnified Person is not
                    a party; PROVIDED, HOWEVER, that the Company shall not be
                    responsible for any claims, liabilities, losses, damages, or
                    expenses pursuant to this paragraph which are finally
                    determined to have resulted from the gross negligence or
                    willful misconduct of any Indemnified Person. The Company
                    further agrees that the Company shall not, without the prior
                    written consent of the Indemnified Parties, settle,
                    compromise or consent to the entry of any judgment in any
                    pending or threatened claim, action, suit or proceeding in
                    respect of which indemnification may be sought hereunder
                    unless such settlement, compromise or consent includes an
                    unconditional release of Restoration and each other
                    Indemnified Person hereunder from all liability arising out
                    of such claim, action, suit or proceeding.

          8.        INDEMNIFICATION OF OFFICERS. In addition to the foregoing
                    indemnification, any Restoration personnel who may serve as
                    officers of the Company shall be individually covered by the
                    same indemnification and directors' and officers' liability
                    insurance as is applicable to other officers of the Company,
                    which insurance shall provide for no less than $7.5 million
                    of coverage for each such officer or director.

          9.        CONFIDENTIALITY. Restoration agrees to keep confidential all
                    non-public information obtained from the Company.
                    Restoration agrees that neither it nor its officers,
                    members, principals, affiliates, subcontractors, their
                    respective directors, officers, agents and employees or
                    attorneys (the "Confidential Parties") will disclose to any
                    other person or entity, or use for any purpose other than
                    specified herein, any information pertaining to the Company
                    or any affiliate thereof which is either non-public,
                    confidential or proprietary in nature ("Information") which
                    it obtains or is given access to during the performance of
                    the services provided for hereunder. Restoration may,
                    however, make reasonable disclosure of Information to third
                    parties in connection with their performance of their
                    obligations and assignments hereunder. In addition, for
                    purposes of this Agreement, the Information does not include
                    information which (a) is now or in the future becomes
                    generally to the public other than as a result of a
                    disclosure by the Confidential Parties, (b) was available to
                    the Confidential Parties on a non-confidential basis prior
                    to its disclosure to the Confidential Parties pursuant to
                    this Agreement, (c) becomes available to the Confidential
                    Parties on a non-confidential basis from a source other than
                    the Company, provided that the source is not bound by a
                    confidentiality agreement with the Company.

                    Should the Confidential Parties be requested or
                    required, by oral questions, interrogatories, requests for
                    information or documents, subpoena, civil investigative
                    demand, court order or other process issued by a court of
                    competent jurisdiction or any federal or state agency or
                    administrative review board to which the Confidential
                    Parties are or may be subject, to disclose any or all of the
                    Information, the Confidential Parties will promptly provide
                    written notice of same to the Company so that the Company
                    may seek a protective order or other appropriate remedy. In
                    no event will Confidential Parties disclose more than that
                    portion of the Information that is legally required and the
                    Confidential Parties shall cooperate with the Company in its
                    effort to obtain a protective order or other assurance that
                    the Information will not be disclosed, or, if it is
                    disclosed, will be disclosed in such a manner as to limit to
                    the greatest extent possible the number of persons who are
                    granted access to the Information.

          10.       FRAMEWORK OF THE ENGAGEMENT. The Company acknowledges that
                    it is hiring Restoration to provide consulting service to
                    assist and advise the Company in its reorganization.
                    Restoration's engagement shall not constitute an audit,
                    review or compilation, or any other type of financial
                    reporting engagement that is subject to the rules of the
                    AICPA or other such state and national professional bodies.

          11.       TERMINATION. Either Party may terminate the Engagement at
                    any time by giving the other party written notice of such
                    termination (the "Termination"); provided that,
                    notwithstanding such Termination, Restoration will be
                    entitled to any fees and expenses earned pursuant to the
                    provisions of this Agreement. Such payment obligation shall
                    inure to the benefit of any successor or assignee of
                    Restoration. It is further understood that unless the
                    Company acts in bad faith, or has not remained current with
                    its payment obligations to Restoration, as set forth herein,
                    or has not or is unable to pay its trust fund tax
                    obligations (including but not limited to withholding taxes,
                    sales taxes), Restoration will not terminate the Engagement
                    prior to the last business day of the sixth month following
                    the commencement of the Engagement. It is further understood
                    that unless Restoration acts in bad faith, the Company will
                    not terminate the Engagement prior to the last business day
                    of the third month following the commencement of the
                    Engagement.

          12.       SURVIVAL. The obligations of the parties pursuant to
                    paragraphs 5, 6, 7, 8, 9 and 10 shall survive the
                    Termination of this Agreement along with any other section
                    that expressly provides that it shall survive the
                    Termination.

          13.       RELATIONSHIP OF THE PARTIES. The parties hereto intend that
                    an independent contractor relationship will be created by
                    this Agreement. Restoration and its officers, members,
                    principals, affiliates, subcontractors, their respective
                    directors, officers, agents and employees are not to be
                    considered an employee or agent of the Company and are not
                    entitled to any of the benefits that the Company provides
                    for the Company's employees, except as may otherwise be
                    expressly provided for in this Agreement.

          14.       ASSIGNABILITY. The benefits of this Agreement shall inure to
                    the benefit of the parties hereto, their respective
                    successors and assigns and of the Indemnified Persons
                    hereunder and their successors, assigns and representatives
                    and the obligations and liabilities assumed in this
                    Agreement by the parties hereto shall be binding upon their
                    respective successors and assigns. This Agreement may not be
                    assigned by any party hereto, without the prior written
                    consent of all the parties hereto.

          15.       ENTIRE AGREEMENT. This Agreement incorporates the entire
                    understanding between the parties with respect to its
                    subject matter and supersedes all previous agreements or
                    understandings that might exist or have existed. This
                    Agreement may not be amended or modified, except in writing,
                    executed by the parties hereto.

          16.       GOVERNING LAW. This agreement shall be governed by and
                    construed in accordance with the laws of the State of New
                    York, without giving effect to principles of conflicts of
                    laws.

          17.       ALTERNATIVE DISPUTE RESOLUTION. If there is any dispute
                    between the parties as to the terms of this Agreement and
                    they are unable to agree on a mutually satisfactory
                    resolution within 30 days, either party may require the
                    matter to be settled by binding arbitration. Such
                    arbitration shall take place in New York City. Following a
                    request for arbitration by either party, the parties shall
                    attempt to agree upon a single arbitrator. If the parties
                    are unable to agree upon a single arbitrator, each party
                    shall appoint one arbitrator. These two arbitrators shall
                    jointly appoint a third arbitrator. In the event the two
                    arbitrators cannot agree on a third arbitrator, the American
                    Arbitration Association in New York City shall appoint the
                    third arbitrator. The arbitration shall be held according to
                    the rules and procedures of the American Arbitration
                    Association. The decision of the arbitrator(s) shall be
                    final, binding and non-appealable.

          18.       DISCLOSURE OF CONFLICTS. Except as may be expressly set
                    forth in an attachment to this Agreement, Restoration knows
                    of no fact or situation that would represent a conflict of
                    interest for it in connection with this Assignment and with
                    regard to the Company. However, it is possible that there
                    may be relationships, either past or currently existing,
                    that need to be brought to your attention as Restoration
                    becomes familiar with the universe of parties who are
                    involved in this assignment. Any such disclosure will be
                    promptly made by Restoration upon its becoming aware of a
                    need to make such disclosure.

          19.       SEVERABILITY. Any provision of this Agreement that shall be
                    determined to be invalid or unenforceable in any
                    jurisdiction shall, as to such jurisdiction, be ineffective
                    to the extent of such prohibition or unenforceability
                    without invalidating the remaining provisions hereof or
                    affecting the validity or enforceability of such provision
                    in any other jurisdiction.

          20.       NOTICES. All Notices required or permitted to be delivered
                    under this Agreement shall be sent, if to restoration, to
                    the address set forth at the head of this Agreement, to
                    Anthony H.N. Schnelling and, if to the Company, to the
                    address set forth above, to the attention of the Chairman of
                    the Board with a copy to William A. Perlmuth, c/o Stroock &
                    Stroock & Lavan, 180 Maiden Land, New York, New York 10038
                    or to such other name or address as you may give Restoration
                    in writing. All notices under this Agreement shall be deemed
                    delivered if sent by facsimile or by overnight mail or
                    courier. All notices shall be deemed to have been delivered
                    only upon receipt by the receiving party.

If the Company becomes involved in a proceeding under the U.S. Bankruptcy Code,
it agrees to petition the Court to affirm this agreement as part of its first
day motions.

<PAGE>

Please confirm that the foregoing is in accordance with our understanding by
signing and returning to Restoration the enclosed duplicate of this letter,
whereupon it shall constitute an agreement binding upon yourselves and
ourselves.





                                           Very Truly Yours,

                                           /S/ ANTHONY SCHNELLING
                                           Restoration Management Company LLC
                                           By: ANTHONY SCHNELLING
                                  Its:     Managing Director


Accepted and agreed as of
October 15, 1999


SENTRY TECHNOLOGY CORPORATION


By: /S/ WILLIAM A. PERLMUTH
   ----------------------------
Its: Chairman of the Board

<PAGE>


                                    Exhibit 1
                                Fee Payments Due


October 15, 1999                      $40,000              Retainer
November 15, 1999                     $20,000              Nov. Fees
December 15, 1999                     $20,000              Dec. Fees
January 15, 2000                      $0                   Retainer Reduction
February 15, 2000                     $20,000              February Fees
March 15, 2000                        $20,000              March Fees1


--------
1 Unless the Engagement is extended or modified prior to April 1, 2000